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The Prime Minister in waiting is unsurprisingly, enthusiastic about devolution, but his first moves in respect of locally collected taxes inadvertently undermine future fiscal devolution.Providing 100% discounts from business rates for small high street firms has been estimated to remove £880m of rates income. That can be counterbalanced by increasing business rates for larger properties, including distribution warehouses operated by Amazon.However if councils were ever to regain control over setting business rates, many would find that their ability to raise income locally had been damaged. All councils have small high street firms, but only some have large distribution warehouses.If the devolutionary impact of potential policy on business rates has not been thought through, there is an opportunity to adopt a radically different, devolutionary approach to taxation of higher value domestic properties.Consultation on the Government's so called ‘High Value Council Tax Surcharge' closed on Tuesday (14 July). Local government should be united in rejecting the name of this proposed central tax. It should refer to council tax only if it is set and retained by councils.Many will support the principle that people who own or occupy more expensive properties should pay more tax. There is probably a reasonable correlation between the value of properties and the financial circumstances of their owners or occupiers.Andy Burnham is reportedly considering the possibility that the surcharge should commence for properties valued at £1.5m instead of £2m. However he should look at scrapping the surcharge idea altogether. An alternative approach would be simpler and cheaper to implement, foster localism and support devolution.That alternative could generate as much income, and possibly more, depending on the detail of the approach taken. It would cost nothing to implement because it would use existing tax structures – no need for fresh valuations, no IT costs and no additional administrative costs. It can be implemented by secondary legislation rather than taking up Parliamentary time with a Bill.ax bills are calculated in accordance with a ratio set in the Local Government Finance Act 1992. Band D is 9, whereas Band G is 15 and Band H is 18. So the bill for a Band G dwelling is 1.67 times the bill for a Band D property (15/9), while the bill for a Band H dwelling is twice what someone pays at Band D (18/9).The alternative approach would involve altering the ratios – certainly for Bands G and H and possibly for Band F as well – while ignoring the impact in the tax base calculations. This could be done by secondary legislation under the 1992 Act.Tax base calculations would continue to be based on the existing ratios, meaning that councils would generate and keep extra income from higher band properties.Greater amounts could be raised by increasing the ratios more sharply and/or by changing the ratio for Band F as well.For example, increasing the ratio for Band F from 13:9 to 14:9 could yield a further £338m before discounts, exemptions etc.Using the current council tax system would mean that, where appropriate, liability would be reduced in accordance with existing arrangements for discounts, exemptions and the local council tax reduction scheme.Those who live in higher value properties and who may have difficulty in paying would receive appropriate assistance and bills would be reduced or removed altogether where there are public policy reasons for doing so (such as student accommodation).Centralism is deeply embedded in the UK and English state. The surcharge is a further centralist proposal – another national tax that central government would control and decide how the income was used.If the Government under a new Prime Minister sticks to its guns, its commitment to devolution would not seem to be as deep as it could be. It would also confirm inconsistency at the heart of government policy on taxation of properties.High value dwellings would be valued on a five yearly cycle. Non-domestic properties are already valued on a three yearly cycle. The lack of any revaluation for council tax for more than 30 years would stick out like a sore thumb.If nothing else, it is time that the Government set out a timetable for a general council tax revaluation in England, which could also introduce further bands for higher value properties.Ian Miller is chief executive of Wyre Forest DC. He writes here in a personal capacity

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FINANCE

Rethinking council tax for devo

By Ian Miller | 20 July 2026

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